Sharp drop in profit for NXP Semiconductors

MariaArmental

NXP Semiconductors NV's profit dropped sharply as operating expenses more than doubled, even as acquisitions and continued strength in its automotive segment drove another revenue surge.

The Dutch company -- best known for designing smartphone chips used in automotive systems, identification and transit cards -- is in talks to merge with Qualcomm Inc., the Wall Street Journal reported, part of a consolidation wave as the chip sector reacts to slower growth.

A conference call with analysts is scheduled for Thursday morning.

Shares, up 17% this year, edged down to $98 in after-hours trading.

NXP started as the semiconductor arm of electronics giant Philips NV and has expanded into one of the largest computer-chip companies with more than $6 billion in sales and a market capitalization of more than $34 billion. Today, it is the No.1 supplier of automotive chips, a fast-growing market.

The company, which is selling its Standard Products business in a deal expected to close early next year, had reported two straight quarters of losses, driven by charges from the Freescale Semiconductor merger.

Over all, third-quarter profit plunged to $91 million, or 26 cents a share.

Revenue surged 62% to $2.47 billion, in line with the company's projections. However, excluding revenue from Freescale and other adjustments, NXP said, revenue would have been down about 3%.

Gross profit margin narrowed to 48% from 48.6% a year earlier.

NXP ended the quarter with about $1.57 billion in cash and $9.4 billion in debt.

For the current quarter, it projects $2.39 billion to $2.49 billion in revenue, compared with analysts' $2.42 billion, according to Thomson Reuters.

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